|
Gross sales price |
|
$1,000,000 |
Less selling costs at 7 percent |
|
$70,000 |
Net sales price |
|
$930,000 |
Less adjusted basis: |
|
|
Cost basis |
$320,000 |
|
Less depreciation allowed |
115,667 |
|
Adjusted Basis |
|
204,333 |
Net gain |
|
$725,667 |
Capital Gains |
15% |
$91,500 |
Depreciation Recapture |
25% |
$28,917 |
Total Tax Liability |
|
$120,417 |
Net gain after taxes |
|
$605,250 |
Example - 1031 Exchange:
|
Previous NOI |
@7% |
$70,000 |
Previous Cash Flow |
No Loan |
$70,000 |
Gross sales price |
|
$1,000,000 |
Net Proceeds |
|
$930,000 |
Replacement Property |
|
$3,000,000 |
Leverage: |
|
$2,070,000 |
Debt Service @5.5% |
|
$109,000 |
Net Operating Income |
@7% |
$210,000 |
New Cash Flow |
|
$111,000 |
Total Tax Liability: |
|
$0 |
|
